Big Payment Reform to Programs for NJ's Developmentally Disabled

Some providers of services to thousands of severely disabled New Jerseyans are nervous about potential downsides of big changes in way they are paid

Heading into 2018, organizations that offer community housing and other services to more than 10,000 seriously disabled New Jerseyans are in the midst of a major payment reform that could prove disruptive to both providers and those they assist.

State officials point out that the shift from a decades-old system of annual contract payments to a model in which providers are reimbursed for specific client services will eventually give more options to residents and their families and allow the Garden State to access additional federal Medicaid dollars — money that can be used to expand and create more sustainable services in the future. Some providers also believe the change can strengthen the industry in the long run.

The reform also reflects a larger evolution in how Medicaid is used to fund community-based services, thanks in part to federal waivers that have provided New Jersey more flexibility in how it spends this mix of federal and state money. Groups that provide mental health and addiction services are also undergoing this transition, sparking concerns that some entities will lose funding and could be forced to reduce care.

Organizations that serve disabled individuals concede the transition to the so-called fee-for-service model will strengthen the network of residential and day programs, but — like their behavioral health colleagues — they are concerned about new, unfamiliar regulatory requirements, an increased administrative burden, and the impact these changes will have on those they serve: a highly vulnerable population they said is too often misunderstood or ignored.

“We’re getting a lot of phone calls” with questions about the process, said Vicky Calabro, president of Everas Community Services, a nonprofit provider with homes in communities around the state. “This is very frightening for some families.”

Chronic lack of funding

Other providers worry about the pace of change and the state’s ability to fully support the shift. The Department of Human Services, which is overseeing the process, has lost a number of key leaders, providers said, and the government is likely to see additional upheaval when Gov.-elect Phil Murphy takes over in mid-January.

The shift to fee-for-service is also made vulnerable by what some leaders said has been a chronic lack of funding over the years, including reimbursement rates that don’t meet their real costs, and a growing shortage of critical, front-line workers — a workforce that is paid little and subject to significant turnover. (State officials said funding for the agency doing this work has continued to increase annually.)

“You already have three strikes against you as you’re trying to transition,” explained Valerie Sellers, CEO of the New Jersey Association of Community Providers, which represents 55 group homes, supervised apartments, and other facilities that provide housing and services for individuals with intellectual and developmental disabilities.

“The reality is we have to do this, and we have to make it efficient and effective,” Sellers added. “The challenge is, how do we help agencies become strong and capable enough to continue to serve this large community.”

Within DHS, the Division of Developmental Disabilities contracts with some 450 community-based organizations that provide day programs like education and employment assistance and residential facilities, which range from supervised apartments to group homes of various sizes. State officials said roughly 180 of these are involved in the fee-for-service transition, which has been under development for years.

Fee for service

In the past, DDD gave these providers a set amount — distributed in 12 monthly allotments — to cover all housing, program, and related costs for everyone they served. The state is now working to shift hundreds of individuals each week to the new system, in an effort to have most of the 12,000 people who are served through this program enrolled in the fee-for-service system by June; the rest will be added before June 2019, officials said.

Once an individual is shifted into the new system, providers must bill the state’s Medicaid office, another DHS division, for program costs, in some cases documenting the care in 15-minute increments. Housing expenses are now covered through a separate voucher system created to support the endeavor, administered by the Housing and Mortgage Finance Administration, within the state’s Department of Community Affairs. Unfortunately, these two transitions don’t necessarily happen at the same time.

The Medicaid billing system has presented frustrations for some organizations. And, for smaller groups with limited staff or technology, the process could prove impossible, providers warned. “We’re an anomaly,” Calabro said of this group of providers, “we don’t fit in neatly.”

Brian Hancock, executive director of Devereux Advanced Behavioral Health, New Jersey — a national nonprofit at work in more than a dozen states, many of which have already gone through this transition — said putting the housing funding into a separate program is somewhat unique. Other states have created a Medicaid fee structure to cover room and board, he said, but officials here were concerned this would run afoul of evolving federal regulations.

Seismic shift

“The true test will come when all these vouchers have to be renewed next year” by the HMFA, Hancock said, since this process added an “overwhelming volume” to its existing work. “It’s been an accounting challenge,” he added.

Devereux operates 59 group homes in New Jersey that serve 250 individuals; by the second week of December one-quarter of these folks had been added to the fee-for-service system and three-quarters had been shifted to the new housing voucher program.

“It’s a whole lot of work for everyone, and people are anxious,” Hancock said, “but I think there will be net positives over all” when the process is complete.

The biggest concern for some providers has been the addition of support coordinators, independent third parties responsible for working with families to determine what services and supports they need; in the past, this role was played largely by the providers themselves. While some agree it makes sense to have an impartial voice in this process, others complain these coordinators don’t know enough about the services available and have no relationship with the individuals and families involved.

“This has been the most seismic shift for us, and very particularly for the families, for them to welcome a new entity into the individual’s support team,” explained Clair Roher, senior vice president of community services with Bancroft, a nonprofit with facilities in Delaware, Pennsylvania, and New Jersey, where several hundred individuals are in the process of transitioning into the new system.

Evolve to survive

“In the end, I think it will be a very good change for all parties,” Roher added. Fee-for-service “has been a long time coming,” she said, “and underneath it all we have one focus, to keep the services very stable and to keep the experience of the individuals we serve very stable.”

Roher praised the NJACP for its work to represent their interests and said state officials have met with them regularly to provide updates on the process. DHS has also welcomed detailed feedback, she said, both negative and positive. “It’s not about tattle-tailing, it’s about course-correcting,” she said.

Some providers will have to evolve to survive, suggested Calabro. Over the years, she has helped build Everas — which assists those with a broad range of needs, including visual and hearing impairment issues, autism, and intellectual disabilities — from a much smaller, more focused group, the New Jersey Association of the Deaf Blind, a change that was necessary to remain competitive. This pattern could be positive for the industry overall, she said.

“I think this will be a wonderful thing,” Calabro said of the fee-for-service change, but stressed it won’t be an easy process. “The risk definitely sits with the provider, which is scary. But the flip side is you can chose your own destiny.”